Can Ebay Continue Growing?
Can eBay Continue Growing?
1. What is eBay’s business model and business strategy? How successful has it been?
According to the course textbook there is several internet business models found on page 444. The internet business model that best describes eBay is an “online marketplace”. As it says in the case itself, “eBay is an online auction service…who stores no inventory and ships no products. Instead, it derives its revenue from the movement of information”. This is essentially what an online marketplace does. It provides a digital environment where buyers and sellers can meet. From there, they can exchange products. This is done by displaying and searching for products and then setting the prices at which the transaction will occur.
EBay’s business strategy is to generate revenue from the fees and commissions charged to the customers who use the site to exchange products. The commission scale is somewhat complicated, but seems to be successful. The revenue is generated by the people who use the site. However, the interesting part of this business strategy is that none of these people actually work for the company.
EBay is very successful. According to the case, the company has been profitable and had attracted more than 200 million users by 2006. It has operations in 32 countries. In 2005, eBay users listed 1.8 billion items in auctions. This caused about $46 billion dollars exchanging hands. One of the most successful parts of the company is that it is fully automated. This significantly reduces costs to eBay, keeping net income high.
2. What are the problems that eBay is currently facing?
One problem is that analysts report that many of eBay’s top sellers aren’t interested in adding voice calls to their sales models. They can barely keep up with the e-mail they receive on eBay and may like the simplicity and above all the anonymity of the current system.
Another problem is that since eBay is growing internationally, it may not
1. What is eBay’s business model and business strategy? How successful has it been?
According to the course textbook there is several internet business models found on page 444. The internet business model that best describes eBay is an “online marketplace”. As it says in the case itself, “eBay is an online auction service…who stores no inventory and ships no products. Instead, it derives its revenue from the movement of information”. This is essentially what an online marketplace does. It provides a digital environment where buyers and sellers can meet. From there, they can exchange products. This is done by displaying and searching for products and then setting the prices at which the transaction will occur.
EBay’s business strategy is to generate revenue from the fees and commissions charged to the customers who use the site to exchange products. The commission scale is somewhat complicated, but seems to be successful. The revenue is generated by the people who use the site. However, the interesting part of this business strategy is that none of these people actually work for the company.
EBay is very successful. According to the case, the company has been profitable and had attracted more than 200 million users by 2006. It has operations in 32 countries. In 2005, eBay users listed 1.8 billion items in auctions. This caused about $46 billion dollars exchanging hands. One of the most successful parts of the company is that it is fully automated. This significantly reduces costs to eBay, keeping net income high.
2. What are the problems that eBay is currently facing?
One problem is that analysts report that many of eBay’s top sellers aren’t interested in adding voice calls to their sales models. They can barely keep up with the e-mail they receive on eBay and may like the simplicity and above all the anonymity of the current system.
Another problem is that since eBay is growing internationally, it may not